9:33AM Well we’re inside at Apple HQ… and the folks in Cupertino are serving everyone a huge breakfast. We’re not kidding, there’s a massive spread of food here. The good stuff too. Nilay is currently in a pancake coma.

9:35AM See, we told you!

12:45PM Looking to augment our world class text and photo updates with a bit of live video? Check out Apple’s stream of the event right here. Sorry, Mac users only.

9:53AM Okay, we’re in our seats in the theatre, and some smooth jazz is playing. The perfect complement to our huge huge breakfast.

9:57AM Ooh. The Peanuts theme!

9:57AM We hope Snoopy comes out to introduce the Verizon iPhone.

9:59AM And the lights are going down…

9:59AM Music is off… and Steve is out!

9:59AM “Good morning. Thank you. Thanks for coming this morning.”

10:00AM “We’ve got some fun stuff to share with you this morning, and because we’re in a more intimate setting, I thought it would be nice to let some of our engineers demoing stuff to you. I’m going to be a little like a yo yo.”

10:00AM “I’d like to start with the state of the mac… here’s Tim Cook.”

10:00AM “Good morning everyone. I’d like to talk about revenue in putting the Mac business in context. The Mac made up 33% of our revenue last year. That was 22b.”

10:01AM “To put this in some context, the mac company, if it were standalone… and we have no plans to do that… would be #110 on the Fortune 500.”

10:02AM “This is 3x what we did five years ago. It’s incredible. It’s led to an incredible increase in the installed base — 50m users worldwide.”

10:02AM “This didn’t just start happening. Last quarter the Max grew 2.5x. It’s outgrown the market for 18 quarters in a row.”

10:02AM “The Mac share in retail was over 20% — that’s one in 5 PCs that are sold in retail.”

10:03AM “Now, with the share rising and the units rising much faster than the industry, we have a very vibrant dev community. We have 600k registered Mac devs. They’re growing at 30k per month.”

10:04AM “We have new devs like Valve, they’re bringing titles simultaneously to the Mac and PC. Like Half Life. This is great for the Mac, and a great shot in the arm for gaming on Macs.”

10:04AM “AutoCAD is coming to the mac — we’ve coveted this for a long time.”

10:04AM “And then we have devs who are continuing to invest in the Mac like Microsoft.”

10:05AM “With all of the success in devs, and all of the growth, maybe what’s more meaningful for us is that customer satisfaction is great.”

10:05AM “The Mac is #1 seventh year in the row, and Consumer Reports, #1 in the last decade.”

10:06AM “Pretty incredible results. Fueling this momentum is this incredible push into retail, which is still under 10 years old. Our stores welcomed 75m visitors last year. They sold 2.8m Macs. And about 50% of those are new to the Mac.”

10:07AM Tim is showing off some of their stores. “The stores in China are the highest traffic of any of our stores. You know that’s making a statement.”

10:07AM “So that is the state of the Mac — the momentum has never been more…”

10:07AM Steve is back.

10:08AM “Thanks — you know I could hear a lot of phones beeping… maybe everyone could flip the silencer on their phones?”

10:08AM “So let’s move on to some new products. I’d like to talk about iLife. It’s widely regarded as the best suite of digital lifestyle apps in the world. You can’t do this on any other computer. We improve it every year or two, coming out with new version.”

10:09AM “We have a new version we’re announcing today — iLife 11. We want to give you a look at the apps. The first one is iPhoto — we tried this fullscreen mode in the last release — the response has been so great that we’re fleshing it out, you can live full screen. We’ve got a lot of Facebook enhancements, we’ve made it easy and elegant to email photos, we’ve added some new slideshows…”

10:10AM “A big leap in books. We’re printing 2m books a year. And we’re adding beautiful letterpress cards. A lot of great stuff. To take us through a demo, here’s Phil Schiller.”

10:10AM “Good morning everyone, I get to be the first to show you this great piece of software. I know a lot of you use it. This is the best version yet.”

10:10AM “Here’s the new fullscreen mode…” Hmm, kind of looks like an iPad app!

10:10AM Actually, it looks a lot like an iPad app.

10:11AM “I can click on faces and get a fullscreen faces view… and there’s a new fullscreen places view too. It’s gorgeous.”

10:12AM “You see pushpins on the map from every place I took photos — I can hover my mouse over any pin — I can click on it to go right to my photos, or I can say ‘show photos’ and that’s every photo from around that place.”

10:12AM This is pretty cute — it’s a 3Dish, top down slideshow around the map.

10:13AM Phil had an awesome London vacation.

10:13AM “Let’s go into album view. The albums look a little like the albums you have on an iPad.” Oh snap!

10:14AM You can also pull in photos from Flickr.

10:14AM “This is called the reflections template.” It’s making us reflect on our decisions during breakfast. Did we make the right choices?

10:15AM “This one is great — it’ll hopefully get you in the holiday spirit.” This is adorable — it’s a mobile of photos swinging around. Oh, and there’s snow.

10:15AM “So that’s just three examples of templates for slideshows. Steve mentioned there’s a great new way to send photos via email. It can be cumbersome to cut and paste to get a bunch of images into an email.”

10:16AM “I can just select them and say share, and right from inside of iPhoto it prepares an email.” This is kind of interesting — it auto-arranges your photos, you know, naturally.

10:16AM Phil is sending Steve some pictures of one of his awesome vacations.

10:17AM “I’ve never left iPhoto and I mailed those off. It’s easy.”

10:18AM “Here you can see friends on Facebook and what they responded back after I posted it. So that’s sharing photos. Well what if I want to create one of these new books?”

10:18AM We wish Apple would create and print a book out about our breakfast here.

10:19AM Phil is putting a book together. It’s not about our breakfast, but it does appear to be about… yes, another incredible vacation. How does Phil get any work done with all of these trips?

10:20AM “I have complete control of this. I can customize it with a simple drag and drop. There it is. Maybe I want to highlight this page and make it really special.”

10:20AM We’ll be honest, this iPhoto demo is slightly boring. No offense Phil.

10:20AM iPhoto now has a project view which is a fullscreen wooden bookshelf, a la iBooks.

10:22AM Steve is back… “I think that’s awesome. This is why we do what we do.”

10:23AM “So we’ve taken iPhoto and broadened the full screen mode… we’ve taken books up a notch, and these letterpress cards… we’re really excited about these new features. And that’s iPhoto 11. Next up, iMovie.”

10:24AM “The number one request we got in the last version was better audio editing. We want to be able to do sophisticated editing really easy — if you don’t want to learn Final Cut Pro.”

10:25AM Randy Ubilous is up… to explain iMovie.

10:25AM “You can see here the audio waveform shows the fade in in this clip, and it’s all done live.”

10:26AM “You can now select segments of audio — you can move the levels of just that segment. It gets quiet in just the segment we selected.”

10:27AM “I want to show you something called one step effects. We’ve got a nice double jump here — it’d be really nice if we did an instant replay…” These are basically effect macros, allowing you to group a number of changes / edits and apply them at once.

10:28AM “So really complex editing with just a couple of clicks. The next thing I want to show you is movie trailers. We now have 15 movie trailers.” Okay, we love this. Instant trailers!

10:29AM Laughs from the crowd here on some of the templates. Some very familiar trailer stuff.

10:29AM You get an outline sheet to fill in your trailer information.

10:29AM This seems silly, but it will probably spark a flood of homemade trailers. Which is likely bad for humanity.

10:30AM Being able to adjust FPS speed! A minor note here — but that’s big.

10:31AM You can switch to 24fps if you like.

10:31AM Trailer music was recorded by a full symphony.

10:31AM The trailer tool gives you templates that ask for specific types of clips. You just drag and drop the appropriate clips into the outline.

10:32AM Face detection tech from iPhoto is in use here, can now detect faces in video. Can also detect whether a shot is a close up or wide. Pretty interesting application of the technology.

10:33AM The tool asks for specific people for closeups. Highly interesting. This is going to change the course of Engadget’s turn-of-the-century gangster epic we’ve been filming.

10:35AM So they just ran this trailer. Seriously impressive, and of course… huge applause.

10:35AM Now we’re seeing some of the other trailers you can make. Fun stuff.

10:36AM We want to see this movie about a stranger and their friends… bad. We hear it’s coming Fall 2010.

10:37AM We’re guessing you’ll need to have friends and / or a family to really make this work.

10:37AM Steve is back! “That is awesome, you know Randy and his team invented all this stuff.”

10:38AM “So a lot of great new features in iMovie 11. We also have a new Garageband. Garageband 11. It has some great new features to help you fix timing in your music, something called flextime… more effects… and new piano and guitar lessons. Here’s Xander Soren.”

10:40AM “We’re going to open an existing song. Now imagine a group of kids have gotten together to jam in their garage, and every recorded to a drum loop. Now I think it’s going to be clear that these guys are going to need a little help.” Ouch, lots of off time playing. “Kind of mess, right? Well the problem is the rhythm, everyone is playing sloppy. Drums are great, they’re the only thing in the song that’s right.” Oh we get it — you don’t have to learn to play better — GarageBand will fix it for you.

10:40AM Because it would be terrible if someone just learned to play tighter with their band.

10:41AM So the new GB does “groove correction” automatically.

10:41AM “We don’t want our songs sounding robotic.” Well we have some bad news for you…

10:43AM Flextime allows auto dragging of lengths of waveforms. You can make notes longer or shorter at will.

10:43AM New built-in lessons. But who needs lessons when you’ve got Groovematching and Flextime?

10:44AM New fullscreen view of Lessons — again, looks very much like an iPad application. It’s pretty clear where Apple is headed with this stuff.

10:45AM New “how did I play” is a lot like Rock Band… but less fun.

10:46AM It keeps a history of your performances so you can relive painful mistakes.

10:47AM Steve is… back!

10:48AM “Isn’t that great? So, GarageBand 11 with some great new features in it. Over 5m use GarageBand now. So, iLife 11. iLife 11, all this amazing engineering that’s gone into these products… is free with every new Mac. If you want to upgrade your existing Mac, just $49.”

10:48AM “And iLife 11 is available today.”

10:48AM “Thanks to Greg and everbody on his team. So that’s iLife. Next up, I’d like to talk about FaceTime.”

10:49AM “It’s the first video calling on mobile devices.” No, it isn’t.

10:49AM “We’ve shipped 19m devices with FaceTime on them.”

10:49AM “The number 1 request we’ve gotten is, can we please do FaceTime calling with these devices and the Mac? We’re introducing FaceTime for the Mac today.”

10:50AM “We’re really excited by this — so let me give you a demo. On my Mac here we have our FaceTime logo. I double click on it. I go to favorites and here’s Phil Schiller. Hey Phil!” And there he is.

10:51AM “What are you on Phil?” “I’m on an iPhone 4, I always have it with me.” “Hey, turn your phone into landscape mode… want to turn it back?”

10:52AM “So that’s FaceTime for the Mac, and we’re going to release that in beta… today!”

10:52AM “There’s the new logo.”

10:52AM “Now, next up, the entrée for today… we want to give you a sneak peak at where we’re going with OS X.”

10:53AM “We’ve had seven major releases of OS X in the last decade. We’re improving with every release. We’re happy with Snow Leopard, but we’re going to take it even further. We’re going to give you a preview of the next version… and we call it Lion.”

10:54AM “What is the philosophy about Lion? That’s where Back to the Mac comes from. We started with OS X and we created a new version called iOS — it’s now used in the iPad as well. We’re inspired by some of those innovations. And we want to bring them back to the mac. Mac OS X meets the iPad.”

10:55AM “These are going to be some of the most exciting things. We want to show you a few key features. So what have we learned and become inspired by on the iPad? Multitouch gestures… the App Store… why not the Mac too?”

10:55AM “App Home screens… full screen apps — every app on the iPad is a fullscreen app.”

10:55AM “Apps on the iPad auto save, you don’t have to bother saving your data. And when you launch apps, they auto resume… that’d be great on the Mac too.”

10:56AM “We want to bring some of this stuff back to the Mac.”

10:56AM “Let’s talk about a few of these — multitouch gestures. The first thing you think of is this…” Finger touching a MBP screen.

10:57AM “It gives great demo, but after a while your arm feels like it’s going to fall off. Touch surfaces want to be horizontal.”

10:57AM “We put a trackpad on our mouse, and we’ve come out with a pure trackpad for desktops.”

10:58AM “The App Store — it’s been huge as you know. On the iPhone it’s completely revolutionized mobile apps. Over 7b apps have been downloaded. We’d like to bring it back to the Mac. For Lion we’ll have a Mac App Store.”

10:58AM Best place to discover apps. One click downloads. Auto app updates. Free and paid apps with a 70 / 30 split. Apps are licensed for use on all your personal Macs.

10:59AM “That is the Mac app store. You’ll have a single place to put them — the launch pad — home screens for your apps.”

10:59AM “So there’s one other thing we’d like to show you today. We have these four cool things we do in OS X. Expose, Dashboard, full screen apps, and spaces…”

11:00AM “This is great, but as we’ve added fullscreen apps, you know we have four of these things. Wouldn’t it be great to unify these? And we’ve done that in something we call mission control.”

11:00AM Craig Federighi is up to demo!

11:00AM “I want to start with the App Store. We’ve taken everything that users love about the iPad and brought it to the Mac.”

11:00AM App Store is a standalone app — looks a lot like iTunes.

11:01AM In fact, nearly identical, and navigation seems largely the same as well. It also auto-tracks updates.

11:02AM One-click on the “buy” button. Drops the app into your dock and auto-downloads.

11:02AM “That’s the Mac App Store.”

11:02AM “Next up is the launchpad.”

11:03AM Ah! It pops open a grid of apps on your desktop like the iPad grid.

11:03AM It also has pages like the iPad. It’s an iPad layer, basically.

11:03AM You can also create folders, exactly like iOS. This is essentially an iOS Springboard layer on OS X.

11:04AM “Next up, fullscreen apps.”

11:04AM Full screen view is, again, very iPad like.

11:05AM You can use a multitouch gesture to swipe away from your fullscreen app and back onto the desktop or another app.

11:05AM Dashboard is now a screen you can flip to using gestures.

11:06AM Mission Control is an Expose view of your windows, your open apps (at least the fullscreen ones), and your dock.

11:07AM It layers apps with multiple Windows in a stack, almost identical to Palm’s new webOS stacks!

11:07AM And guess what? Steve is back.

11:08AM “We’re really excited about Lion. These new features are going to delight Mac users.”

11:08AM “I wish we had another hour and a half to show you more. Our plan is to release Lion this summer, 2011.”

11:08AM “So that is OS X Lion.”

11:09AM “Now I want to go back and talk about the App Store for a minute. The Mac App Store is going to be really great for our users. We don’t want to wait for Lion. We’re going to put it out on Snow Leopard, and will open within 90 days.”

11:10AM “Again, Back to the Mac… we saw the state of the Mac, we love it, we’re investing heavily in it. Our retail marketshare has topped 20%, and we continue to invest in our retail stores.”

11:11AM “iLife 11, phenomenal new applications… FaceTime on Mac…”

11:11AM “And, Lion — coming this summer with amazing features like Mission Control…”

11:11AM “These are the things we wanted to share with you today… but there is one more thing.”

11:11AM “That one more thing really comes back to our theme today. We talked about this virtuous circle.”

11:12AM “Just like this philosophy has benefit in our software, it can have benefit in our hardware. What would happen is a Mac met an iPad?”

11:15AM “There is no optical drive, and there is no hard drive. We have gone to flash storage. Why do we do this?”

11:16AM “Because we know the benefits from the iPad. Instant on. It’s much more reliable. And it’s 90% smaller and lighter.”

11:16AM “Battery life… wireless web tests, 7 hours, 30 days standby.”

11:17AM “The wireless web tests… these… the PC industry’s tests don’t reflect real world use. We’re moving to more real world tests. Even in these tests, we’re getting 7 hours of battery life. We think it’s a double improvement.”

11:18AM “So what’s inside this puppy? Let’s take a look. We have flash storage. 802.11n WiFi, C2D CPU, memory, stereo speakers… and our battery. You see what the biggest thing is in there. It’s our battery.”

11:19AM “Now this 13.3 inch MacBook Air isn’t the whole story… because it has a younger brother.”